The term ‘Sukuk’ may still be unfamiliar to many Australians. Originating from Islamic finance principles, this investment instrument represents a form of financial certificate similar to a traditional bond but is structured to comply with Shariah law, which prohibits the charging of interest.
Despite its origins in Islamic finance, Sukuk has attracted global interest, extending beyond Muslim-majority nations. This alternative investment has become increasingly popular among international investors seeking portfolio diversification and new market opportunities.
Sukuk is an Islamic financial certificate similar to a traditional bond, but it follows Shariah law by prohibiting Riba. It represents ownership in an asset, project, or investment, with returns generated from the underlying asset. Unlike traditional bond, this instrument offers ethical investment options in compliance with Islamic principles.
This instrument can utilize various assets, including but not limited to land, buildings, and specific projects. The key point is that they need to follow the principles of Shariah in the capital market, ensuring that all investments are in line with ethical and religious guidelines.
Sukuk comes in various forms, each with its own unique features and risk profiles. Some common types include Ijarah, Musharakah, and Mudarabah. These diverse options allow investors to choose the instrument that aligns with their risk appetite and financial goals, providing a customizable and flexible investment experience.
In recent years, the global Sukuk market has experienced significant growth, attracting investors from various backgrounds and beliefs. Countries such as Malaysia, Saudi Arabia, and the UAE have played a vital role in promoting and expanding the market, showcasing its potential for ethical and inclusive financial development.
Currently, the global Sukuk market is valued at USD 915 billion in 2022 and is expected to reach a value of USD 2.3 trillion by 2028, based on a predicted cumulative annual growth rate (CAGR) of 16.2% from 2023 to 20281 .
Hejaz, a leading global Islamic finance provider, has made history by introducing Australia’s first ever Sukuk Exchange Traded Fund (ETF). This new offering provides investors with access to a Shariah-compliant bond alternative product, marking a significant milestone in the Australian financial landscape.
Launched on the ASX, November 2, 2023, the Hejaz Sukuk ETF (ASX: SKUK) presents an opportunity for retail, wholesale, and institutional investors in Australia and New Zealand to engage in Sukuk, a shariah-compliant fixed income asset similiar to a traditional bond.
Don’t miss your chance to be part of this groundbreaking investment venture. Invest in the Hejaz Sukuk ETF (ASX: SKUK) today and become a part of the future of ethical investing!
The information presented above is prepared by Hejaz Asset Management Pty Ltd (ABN 69 613 618 821). It provides general information only, which means it does not take into account your individual objectives, financial situation, needs or circumstances. Before making any financial decision, you should assess whether the information is appropriate for you. You should also seek appropriate financial advice tailored to your needs before making any financial decisions. This information is not an offer or recommendation to make any investment or adopt any investment strategy. Past performance is not a reliable indicator of future performance.
1 IMARC Group. (2022). Sukuk Market Report. Retrieved from https://www.imarcgroup.com/sukuk-market
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